AP FACT CHECK: Trump's hyped claims on economy, NKorea, vets

Published 07-28-2018

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WASHINGTON (AP) - President Donald Trump received positive economic news this past week and twisted it out of proportion. That impulse ran through days of rhetoric as he hailed the success of a veterans program that hasn't started and saw progress with North Korea that isn't evident to his top diplomat.

THE FACTS: That doesn't square with the record. Trump didn't inherit a fixer-upper economy.

The U.S. economy just entered its 10th year of growth, a recovery that began under President Barack Obama, who inherited the Great Recession. The data show that the falling unemployment rate and gains in home values reflect the duration of the recovery, rather than any major changes made since 2017 by the Trump administration.

While Trump praised the 4.1 percent annual growth rate in the second quarter, it exceeded that level four times during the Obama presidency. But quarterly figures are volatile and strength in one quarter can be reversed in the next. While Obama never achieved the 3 percent annual growth that Trump hopes to see, he came close. The economy grew 2.9 percent in 2015.

The economy faces two significant structural drags that could keep growth closer to 2 percent than 3 percent:

While Trump praised the 4.1 percent annual growth rate in the second quarter, it exceeded that level four times during the Obama presidency. But quarterly figures are volatile and strength in one quarter can be reversed in the next. While Obama never achieved the 3 percent annual growth that Trump hopes to see, he came close. The economy grew 2.9 percent in 2015.

The economy faces two significant structural drags that could keep growth closer to 2 percent than 3 percent: an aging population, which means fewer people are working and more are retired, and weak productivity growth, which means that those who are working aren't increasing their output as quickly as in the past.

Both of those factors are largely beyond Trump's control.

TRUMP: "One of the biggest wins in the report, and it is, indeed a big one, is that the trade deficit - very dear to my heart because we've been ripped off by the world - has dropped." - remarks Friday.

THE FACTS: Trump is correct that a lower trade deficit helped growth in the April-June quarter, but it's not necessarily for a positive reason.

The president has floated plans to impose import taxes on hundreds of billions of dollars of foreign goods, which has led to the risk of retaliatory tariffs by foreign companies on U.S. goods.

This threat of an escalating trade war has led many companies to increase their levels of trade before any tariffs hit, causing the temporary boost in exports being celebrated by Trump.

Richard Moody, chief economist at Regions Financial, said the result is that the gains from trade in

Both of those factors are largely beyond Trump's control.

TRUMP: "One of the biggest wins in the report, and it is, indeed a big one, is that the trade deficit - very dear to my heart because we've been ripped off by the world - has dropped." - remarks Friday.

THE FACTS: Trump is correct that a lower trade deficit helped growth in the April-June quarter, but it's not necessarily for a positive reason.

The president has floated plans to impose import taxes on hundreds of billions of dollars of foreign goods, which has led to the risk of retaliatory tariffs by foreign companies on U.S. goods.

This threat of an escalating trade war has led many companies to increase their levels of trade before any tariffs hit, causing the temporary boost in exports being celebrated by Trump.

Richard Moody, chief economist at Regions Financial, said the result is that the gains from trade in the second quarter will not be repeated.

TRUMP: "We're having the best economy we've ever had in the history of our country." - remarks Thursday in Granite City, Illinois.

THE FACTS: This is not the best the U.S. economy has ever been.

The unemployment rate is near a 40-year low and growth is solid, but by many measures the current economy trails other periods in U.S. history. Average hourly pay, before adjusting for inflation, is rising at about a 2.5 percent annual rate, below the 4 percent level reached in the late 1990s when the unemployment rate was as low as it is now.

Pay was growing even faster in the late 1960s, when the jobless rate remained below 4 percent for nearly four years. And economic growth topped 4 percent for three full years from 1998 through 2000, an annual rate it hasn't touched since.

TRUMP: "The Canadians, you have a totally closed market ... they have a 375 percent tax on dairy products, other than that it's wonderful to deal. And we have a very big deficit with Canada, a trade deficit." - remarks Thursday in Peosta, Iowa.

THE FACTS: No, it's not closed. Because of the North American Free Trade Agreement, Canada's market is almost totally open to the United States. Each country has a few products that are still largely protected, such as dairy in Canada and sugar in the United States.

Trump also repeated his claim that the U.S. has a trade deficit with Canada, but that is true only in goods. When services are included, such as insurance, tourism, and engineering, the U.S. had a $2.8 billion surplus with Canada last year.

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NORTH KOREA

TRUMP: "We're also pursuing the denuclearization of North Korea and a new future of prosperity, security, and peace on the Korean Peninsula and all of Asia. New images, just today, show that North Korea has begun the process of dismantling a key missile site. And we appreciate that. We had a fantastic meeting with Chairman Kim, and it seems to be going very well." - remarks Tuesday to Veterans of Foreign Wars convention in Kansas City, Missouri.

THE FACTS: Trump's assessment that his administration's plan to dismantle North Korea's nuclear weapons is "going very well" is not fully shared by his own secretary of state, Mike Pompeo. In fact, Pompeo acknowledged this past week that the North is still producing fissile material for nuclear weapons.

Trump made his remarks after the North Korea-focused 38 North website released recent satellite imagery that seems to show dismantlement underway at Sohae.

But Pompeo sounded a note of caution. He said that while such a step would be in line with the pledges that Kim made to Trump at the June 12 summit in Singapore, it would have to be confirmed by international inspectors.

Analysts say dismantling a few facilities at the site alone won't realistically reduce North Korea's military capability or represent a material step toward denuclearization.

Indeed, at a Senate hearing Wednesday, Pompeo acknowledged that North Korea continues to produce fuel for nuclear weapons despite Kim's pledge to denuclearize. Pompeo said there was "an awful long way to go" before North Korea could no longer be viewed as a nuclear threat.

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AMAZON AND MANUFACTURING

TRUMP: "The Amazon Washington Post has gone crazy against me ever since they lost the Internet Tax Case in the U.S. Supreme Court two months ago. Next up is the U.S. Post Office which they use, at a fraction of real cost, as their 'delivery boy' for a BIG percentage of their packages..." - tweet Monday.

THE FACTS: He's wrong to suggest that the U.S. Postal Service delivers packages for Amazon below cost. Federal regulators in fact have reviewed the Amazon contract with the Postal Service each year and determined it to be profitable.

Trump is upset with Amazon because its founder, Jeff Bezos, owns The Washington Post, which Trump has labeled "fake news" after the newspaper reported unfavorable developments during his campaign and presidency.

While the Postal Service has lost money for 11 years, package delivery, a bright spot, is not the reason.

Boosted by e-commerce, the Postal Service has enjoyed double-digit increases in revenue from delivering packages, but that hasn't been enough to offset pension and health care costs as well as declines in first-class letters and marketing mail. Together, letters and marketing mail make up more than two-thirds of postal revenue.

Amazon sends packages via the post office, FedEx, UPS and other services, and has taken steps toward becoming more self-reliant in shipping.

TRUMP: "On the South Lawn, you have the space capsule. And every part is made right here, in America." - remarks Monday at Made in America event.

THE FACTS: Trump neglects to mention a key detail: NASA's Orion crew capsule, one of the star products at the White House event celebrating U.S. manufacturing, will ride through space thanks to Europe.

With its four solar-array wings, the European Service Module supplies propulsion, power and the essentials of life for the capsule's space travels and marks a departure for NASA.

"For the first time," the agency says, "NASA will use a European-built system as a critical element to power an American spacecraft." Airbus, Boeing's prime competitor in commercial air travel, leads an array of European companies that made the service module.

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MILITARY AND VETERANS

TRUMP: "Veterans' unemployment has fallen to the lowest level in almost 18 years. ... And I'll guarantee, within a month or two months, that 18 will be even a much higher number." - remarks Tuesday at VFW convention.

THE FACTS: This boast is based on outdated numbers.

The veterans' unemployment rate was 3.3 percent in June, a low rate historically, but that is still above the 2.7 percent rate in October, which was the lowest in nearly 17 years.

Veterans' unemployment has fallen mostly for the same reasons that joblessness has fallen for everyone else: strong hiring and steady economic growth for the past eight years.

The vets' unemployment rate peaked at 9.9 percent in January 2011, then fell by more than half to 4.5 percent by the time Trump was inaugurated in January 2017. Since then, it has fallen an additional 1.2 percentage points.

Trump won't be able to get to a higher number than 18 years, as he promises to do, because the data only go back to 2000.

TRUMP: "We passed Veterans Choice, the biggest thing ever. ... It has got to be the biggest improvement you can have. So now if you can't get the treatment you need in a timely manner, people used to wait two weeks, three weeks, eight weeks, they couldn't get to a doctor. You will have the right to see a private doctor immediately, and we will pay for it." - remarks Tuesday.

THE FACTS: The care provided under the Choice program is not as immediate as Trump suggests, nor is it likely to be the "biggest thing" ever. Currently only veterans who endure waits of at least 30 days for an appointment at a VA facility are eligible to receive care immediately from private doctors at government expense, a standard that the VA is frequently unable to meet.

Under a newly expanded Choice program that will take at least a year to implement, veterans will still have to meet certain criteria before they can see a private physician.

A recent report by the Government Accountability Office found that despite the Choice program's guarantee of providing an appointment within 30 days, veterans waited an average of 51 to 64 days.

TRUMP: "We're greatly expanding telehealth and walk-in clinics so our veterans can get anywhere, at any time, they can get what they need, they can learn about the problem and they don't necessarily have to drive long distances and wait. It's been a very big success."

THE FACTS: A new benefit that would give the nation's veterans access to commercially run walk-in clinics is not a success at all, because it hasn't started.

It won't begin for another year and the care won't always be freely provided "anywhere, at any time." Only veterans who have used VA health care services in the previous two years would be able to get care at the private walk-in clinics. After two visits, veterans could be subject to higher co-payments charged by the VA.